Indian Hisotrical Data suggests that key drivers for business decisions are confidence in growth and capacity utilization levels. Interest rates rank low for
the corporate capex decisions
There seems to be low sensitivity between corporate capex growth and interest rates if history is used as evidence. If anything, capex seems to fall with falling yields – from a macro perspective, if falling yields are caused by weaker growth, it is plausible for capex to follow suit and vice versa.
Industrial sector and industrial proxies (like the materials sector) underperform the market in a rising interest rate scenario and outperform after rates peak. So we are already near the peak of Interest Rates. Keep an eye on Industrials , Utilities and Materials.
